EUR/USD: Profit-taking slide to extend ahead of ECB decision?
The EUR/USD pair extends its gradual retreat from multi-month tops of 1.1583 reached a day before, as broad based US dollar recovery gathers steam in tandem with the Treasury yields rebound.
EUR/USD looks to test daily pivot at 1.1534
The corrective slide in the EUR/USD pair gained traction in the Asian trades, as the US dollar extended its recovery-mode from eleven-month troughs of 94.27 levels reached against its main competitors, as the rejection of Trump’s Healthcare bill by the Senate Republicans re-ignited concerns over the Trump administration and its capability to deliver on the promised tax reforms.
Adding to the greenback weakness yesterday, mixed US macro news aggravated concerns over dwindling US economic recovery, which could very well keep the Fed away from raising rates this year.
On the other hand, markets are widely expecting the ECB to make a hawkish announcement tomorrow at its policy decision, signaling at QE tapering as early as this September. Hence, the spot also benefited from narrowing monetary policy divergence, while ignoring dismal German ZEW surveys.
German ZEW economic sentiment deteriorates further in July
Looking ahead, the correction in the major could extend further, in a bid to test the key resistance-turned support of 1.1500 levels, in the wake of profit-taking ahead of the ECB decision. Moreover, markets believe the rally is overdone and as excessive and hence, further downside cannot be ruled out.
Data-wise, focus shifts towards the US housing starts and building permits data due later in the NA session, as we have an empty EUR calendar today.
EUR/USD Technical Set-up
According to Valeria Bednarik, Chief Analyst at FXStreet, “In the 4 hours chart, the price holds far above all of its moving averages, whilst technical indicators have turned lower, but remain within overbought territory, indicating limited selling interest around the pair. Support levels: 1.1525 1.1490 1.1460 Resistance levels 1.1580 1.1615 1.1645.”